Tenancy Sparring With CPA for Advertisers' Big Bucks

One question that cropped up during the Performance Panel at last month’s Performance Marketing Insights: London concerned tenancy and the volume of publishers that were now demanding such a payment.

Tenancy differs to CPA in that it is a fixed payment. An advertiser pays a pre-arranged fee regardless of impressions, clicks or conversions for exposure on a publisher’s website, newsletter or other media.

This form of monetisation is ideal for sponsorship opportunities and guarantees a presence on highly trafficked pages, emails or social networks. The downside is that conversions are not a sure thing.

A subsection of publishers might use tenancy if, in their own opinion, they are not being rewarded for their contribution to furthering customers’ journeys and Tradedoubler’s market leader for the north west, Dan Cohen, feels it is a growing trend.

“I think we are moving more that way as an industry,” Cohen said. “There's this added element, that you are getting this exposure, getting that branding and if we're not seeing that at the other end, we can dip out of the industry and try to do things another way.”

Unconcerned by network overrides

As tenancy is not CPA, publishers need not negotiate placements with advertisers through networks. Yet there are still many that do and are charged an override in the region of 30% for choosing not to go direct.

Topcashback may negotiate its own deals, which it says are divided 50/50 between network and direct, but the publisher’s partnerships director, James Little, says it still ends up routing direct partnerships back through the network.

“In terms of who we negotiate the deals with – this is a pretty even split between direct vs. affiliate network and usually just depends how hands on the advertiser is,” Little revealed. “We try to engage directly with advertisers where possible but all activity obviously still runs via the network and the tenancy is generally always inserted and paid this way.”

While several of the networks PerformanceIN spoke to were cagey about revealing anything relating to tenancy, we were able to gain some stats from one. It estimated that 2013’s spend on tenancy would come in at 6.3% of the total commission payout and was heavily skewed towards the telecommunications vertical.

The same network dampened any expectation that tenancies were on the up, though, saying that the percentage was pretty static year-on-year. However, it still recorded a good seven figures in tenancy revenue going through the network each month.

There are obviously some substantial payments being made for tenancies and that is just through the networks. Cashback and voucher publishers that we spoke to refrained from revealing exact figures, but did say that deals were negotiated both through a network and directly with an advertiser.

Tenancy as a CPA supplement

Understandably, networks try to work a CPA-based commission into the tenancy payment, according to affilinet UK managing director, Helen Southgate, as it is their core offering to publishers and advertisers.

“I don't think there's anything wrong with publishers asking for tenancy, but it will always be worked back to a CPA,” Southgate said. “That's what the network will look at, that's what the advertiser will look at. They won't commit to it unless it works on a CPA basis.”

Although, saying that advertisers will only indulge a tenancy payment if CPA is attached could be teetering on naivety. PerformanceIN was given the tenancy presentation of one publisher and it contained no mention of CPA in any of the slides.

The figures contained in the presentation will likely be an eye opener for smaller affiliates looking to supplement income with tenancy payments. Charges ranged from £20,000 for a competition to £50,000 for a gift guide.

Smaller publishers might originally be put off by the groundwork required to pitch tenancy propositions to advertisers, but the kind of figures we have seen being touted would surely be sufficient compensation for those efforts.

Several advertisers, large and small, were approached in the hopes they would reveal their own data, opinion and insights on tenancy's growth, but were unable to before this article went to press.

One agency PerformanceIN contacted expressed concerns that smaller advertisers were being priced out of the market by the hefty sums exchanging hands. If tenancy revenue overtakes CPA revenue, would the consumer just see the same big brands on every publisher's site and newsletter?

Simon Holland

Simon is the news and research reporter at Existem. Previously a technology journalist, he now spends his time investigating both future and developing trends in performance marketing whilst producing editorial content for performancein.com.